Optimal tax policy when firms are internationallly mobile

Johannes Becker and Clemens Fuest

No 907, Working Papers from Oxford University Centre for Business Taxation

Abstract: The standard tax theory result that investment should not be distorted is based on the assumption that profits are locally bound. In this paper we analyze the optimal tax policy in a model where firms are internationally mobile. We show that the optimal policy response to increasing firm mobility may be taxation, subsidization or non-distortion of the marginal investment, depending on whether the mobile firms are more or less profitable than the average firm in the economy. Our findings may contribute to understanding recent tax policy developments in many OECD countries.

Keywords: Corporate taxes; Optimal Tax Policy; Multinational Firms (search for similar items in EconPapers)
JEL-codes: F23 H21 H25 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Optimal tax policy when firms are internationally mobile (2011)
Working Paper: Optimal Tax Policy when Firms are Internationally Mobile (2005)
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